Mortgages can come in all shapes and sizes you know. I did some research last night and found that the three most common mortgages are fixed-rate, tracker, and variable-rate.
Fixed-rate mortgages have a fixed interest rate. That means that the rate the borrower pays will stay the same throughout the term, even if the base rate changes.
Tracker mortgages track the base rate, and often stay just above it. Some tracker mortgages have what is called a collar, this means they won't go below a certain minimum rate.
Variable-rate mortgages are a bit like tracker mortgages in that they follow the base rate - but not as tightly. In other words, whenever the base rate moves, lenders have the decision whether to change the mortgage rate.
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